All posts tagged Spain

European officials have recently said with relief that the eurozone’s fiscal stance this year is “broadly neutral.” After four years of spending cuts and tax increases, that means government austerity is no longer a powerful drag on growth in the region.

But if the European Union is serious about enforcing the bloc’s budget rules, it’s probably more correct to say austerity is on hold for a number of countries.

The reason is the “Fiscal Compact,” the treaty that EU nations signed in 2012 (except for the U.K. and the Czech Republic). Read More »

My father died last December, and as I grieved I knew I was facing a ton of paperwork related with inheritance. It would be a cumbersome affair because I live in Spain and he lived in Norway, meaning I had to report to two countries.

What I didn’t know but quickly learned from my Spanish tax manager was that, even if my dad never lived in Spain, the Spanish government was planning to claim a whopping 34% what he had left me—that it, 34% of his apartment in Oslo, his cabin in the Norwegian woods, his Honda pickup truck, and a portfolio of securities. Read More »

Summer is over and Brussels is on the move again. Here are five things to watch in the coming week:

EU leaders will meet in Brussels on Saturday to try to hammer out a package deal on the bloc’s leadership for the next five years. They are expected to decide on the posts of EU foreign-policy chief and president of the European Council, the body that represents member states’ interests. This will mark their second meeting this summer, after a failed first attempt to agree on top posts at a summit on July 16.Ukraine and Syria are also on the summit’s agenda, and European diplomats said there could be calls to ratchet up sanctions against Russia given the latest reports of Russian troops entering Ukraine. Keep an eye out for comments by Ukrainian President Petro Poroshenko, who will also be in town that day to meet current Council President Herman Van Rompuy and José Manuel Barroso, the president of the European Commission, the EU’s executive arm.

Two diplomatic squabbles in as many weeks between Britain and Spain over Gibraltar suggest the European Union’s call on Nov. 15 for the two member states to work together to solve their long-running dispute has fallen on deaf ears.

Last week, the British protested the entry of a Spanish research vessel into Gibraltar’s territorial waters; this week the spat has centered on two U.K. government bags.

David Lidington, Britain’s Minister for Europe, said two clearly marked British diplomatic bags containing official correspondence and communications were opened by Spanish officials as they were taken from Gibraltar to Spain on Friday. Read More »

A new report from the European Commission timidly suggests what many economists believe to be true: Sky-high unemployment in Europe’s crisis-hit countries is due mainly to the economic crisis – and not the result of a fundamental decline in the ability of these economies to employ their workforces.

The report could add momentum to recent attempts to change the method the commission, the European Union’s executive arm, uses to calculate countries’ long-term, “natural” unemployment rate. If adopted, it could take pressure off crisis-hit states like Spain or Ireland to implement steep budget cuts and other austerity measures.

For the past few years, the commission has been attributing much of the sharp increases in European unemployment to structural issues in national economies, rather than cyclical declines in economic output. As a result, governments were forced to slash their budgets and adopt far-reaching changes to their labor markets and other parts of their economy. Read More »

In the controversy over how the European Union calculates the structural budget balance, much of the attention has focused on Spain. The European Commission’s formula for calculating the Spanish figure spits out the result that most of Spain’s budget deficit is structural — that is, due to the overall structure of the Spanish economy, rather than a cyclical recession. Yet that calculation assumes that Spain’s natural rate of unemployment is close to 24% — an estimate that many economists believe is wrong.

But the figures for Ireland are equally strange. The commission estimates are that almost all of Ireland’s actual deficit is structural, attributing just 0.6 percentage point of the overall 7.5% deficit to cyclical factors. The country’s current unemployment rate, 13.3%, is actually below the commission’s estimate of the natural rate, 14%. And the economy is seen running at full capacity, with almost no output gap. Next year, the commission predicts the Irish economy will actually be operating above capacity.

Visibly moved, European Commission president José Manuel Barroso spoke to reporters Wednesday from Lampedusa, a tiny Italian island off the coast of Tunisia. He’d just seen the lines of coffins of the hundreds of African migrants who perished on their way to Italy last week. He was shocked.

So was Cecilia Malmström, the commissioner in charge of migration, who sat next to him.

“I will never forget the sight of 280 coffins today. I will bear this with me for the rest of my life and I think they express something that we need to think about in the European Union, this isn’t the European Union we want,” she said.

Shock and doubt at Europe’s moral standing when it comes to those desperate enough to flee home on unsafe boats to get to Europe dominated a debate at the European Parliament Wednesday morning.

But shock doesn’t necessarily translate into policy, or, for that matter, into substantial funding.

Mr. Barroso said the commission would give Italy an additional €30 million this year to help refugees there. It is, by all accounts, a small amount. But at the end of the EU budget period, Mr. Barroso is constrained. Read More »

A new study of democracy in the European Union labels Greece and Hungary the most worrisome “backsliders” on democratic values, but also urges special attention to Bulgaria, Romania, Spain and Italy.

The report, conducted by the Demos think tank for the European Parliament’s Socialists and Democrats group, says the current financial crisis has heightened antidemocratic trends, but that this isn’t the sole factor.

The EU should embrace its role as a watchdog of democracy, the paper says, and not see itself as solely an economic bloc. The report cites five major areas of democratic “backsliding.” Read More »

Sailing across the Bay of Gibraltar, the tiny British enclave in the Mediterranean, offers lots of new experiences. Before you even exit the marina, there’s a flashing light to inform you if a jet is about to land at Gibraltar airport, where the runway sticks out across the edge of The Rock as if a giant had been playing Tetris. (Better avoid the planes if you want to keep your mast!)

Then there’s watching dolphins splash around, dodging the colossal ships anchored in the bay to stock up on bargain fuel, and the crazy combination of winds coming over The Rock itself to deal with.

But this summer, mariners also got to witness some political high drama, sailing straight into a territorial dispute between European Union members U.K. and Spain. The fight began with the laying of an artificial reef and has slowly escalated all summer. Read More »

Changing euro-zone labor-market institutions has been one of the main goals of the bailout programs managed by the International Monetary Fund and euro-zone authorities over the last three years.

The thinking is: Europe’s labor markets – particularly those in the euro-zone periphery – need overhauls to allow wages to keep pace with changes in productivity and economic circumstances. This sounds like dry stuff, but it’s been one of the fund’s more controversial bailout recommendations. Making labor markets more “flexible” has in practice meant reducing the role of labor unions in wage-setting across much of southern Europe, leaving unions none-too-pleased with their more limited powers.

In a paper published on Friday, IMF economists led by Olivier Blanchard took a somewhat soul-searching look at the fund’s labor-market advice over the last three years. One interesting finding: The fund should “tread carefully” in its recommendations on collective bargaining, the paper suggests, since evidence about what kinds of bargaining institutions work best is mixed. Read More »

About Real Time Brussels

The Wall Street Journal’s Brussels blog is produced by the Brussels bureau of The Wall Street Journal and Dow Jones Newswires. The bureau has been headed since 2009 by Stephen Fidler, who was previously a correspondent and editor for the Financial Times and Reuters. Also posting regularly: Matthew Dalton, Viktoria Dendrinou, Tom Fairless, Naftali Bendavid, Laurence Norman, Gabriele Steinhauser and Valentina Pop.